Rumor: Microsoft offering to drop Windows Phone license fee for HTC

Form an orderly queue for your free Windows Phone license.

It's hard to find an area at Microsoft that isn't going through some degree of transition, and Windows Phone is definitely no exception. Having carved out a small piece of the market, Microsoft has taken some big steps to improve the position of its still-fledgling mobile operating system. Its first step was to develop a close relationship with Nokia; the second step seems to have been to buy Nokia's handset division outright. But that move has spawned much speculation that Microsoft's handset partners are disgruntled and considering eliminating their Windows Phone portfolio. According to a report from Bloomberg, Microsoft may be making a big move to stem the tide by cutting or eliminating its licensing fee.

Bloomberg reports that conversations between HTC and Microsoft have revolved around the idea of HTC putting Windows Phone onto its Android handsets as an alternative. It's unclear how this would work, but it could mean that users would choose a handset model and then choose an operating system, similar to being able to choose between Windows and Linux in some notebook models. The prospect of a dual-boot solution seems ludicrous and impossible to implement, but Bloomberg's reporting leans strongly in that direction. As enticement to pursue this strategy, the report states that Microsoft has offered to cut or eliminate the licensing fee.

Whether it's a dual-boot solution or something more sensible, the move would require Microsoft to broaden the supported hardware specifications of Windows Phone to support the higher-end hardware that's de rigueur in Android handsets. Evidence for such an expansion of hardware support can be gleaned from the near certainty that this fall's GDR3 update to Windows Phone will include options for 1080p displays.

Microsoft has long derided the free operating system strategy, even going so far as to brag that licensing issues with Android have resulted in handset manufacturers needing to negotiate licensing deals with it—effectively saying that Android isn't free, it's just that Microsoft collects the money. For Microsoft to eliminate the licensing fee for Windows Phone would be a huge shift in strategy and might help revive the somewhat dormant Windows Phone lines from the likes of Samsung or HTC. At the same time, it would help repair any damaged relationships that Microsoft may have incurred in becoming a first-party handset manufacturer with the purchase of Nokia.

HTC may be a ripe target for such a deal. Its unaudited quarterly results, announced yesterday, demonstrate how tough things have been financially. After laying off a big chunk of its US staff, HTC reported a quarterly loss for the first time in the company's history. While it has had some design wins with the HTC One and One mini handsets, it has also had its share of weak spots, including the HTC First handset, which it made in partnership with Facebook. The last Windows Phone handset that HTC released was the HTC 8XT, a decidedly mid-range handset that hasn't delighted users the same way last year's HTC 8X did.

At press time, neither HTC nor Microsoft had any comment regarding these rumors, though Microsoft's representative did stress that conversations with their device partners are confidential. We will report further as this story develops.

Makes perfect sense though; HTC can develop one line of hardware and then ask offer either Android or Windows Phone 8 preloaded - heck, why not go one step further and offer 'free Windows Phone 8 upgrade' to existing HTC One customers to gage what the take up rate would be like? Why dual boot when you can replace the operating system via a firmware upgrade tool that can download the latest firmware when required? about the only downside I could see is in regards to Windows Phone 8 requiring UEFI and whether it can be written over what ever built in firmware that HTC uses on their phone.

The prospect of a dual boot solution seems ludicrous and impossible to implement

It was a while ago, but for some time I had an old 2G iPhone set up to dual-boot iOS and Android (Bootlace and iDroid, IIRC). The Android build was slow and various bits didn't work well (or at all), but that's more down to attempting to port Android to a device with no drivers available (similar issues can be seen with modern devices when using non-stock version upgrades). Dual-booting a phone is hardly impossible.

So, in this scenario, Microsoft would get their OS onto millions of additional phones every quarter without lifting a finger. Reportedly, they'd remove the licensing fee for WP, but still get paid for the Android OS on these devices. And as WP adoption increases, this may actually spur manufacturers that have recently retreated from WP devices in the wake of the Nokia acquisition to drop Android, if WP continues to cost them less.

A quietly brilliant strategy, I must say. The big question is what Google will do in response. Will these dual-OS devices have access to their services, or will they allow Microsoft's Trojan horse strategy?

So, in this scenario, Microsoft would get their OS onto millions of additional phones every quarter without lifting a finger. Reportedly, they'd remove the licensing fee for WP, but still get paid for the Android OS on these devices. And as WP adoption increases, this may actually spur manufacturers that have recently retreated from WP devices in the wake of the Nokia acquisition to drop Android, if WP continues to cost them less.

A quietly brilliant strategy, I must say. The big question is what Google will do in response. Will these dual-OS devices have access to their services, or will they allow Microsoft's Trojan horse strategy?

It depends a lot on the market. It doesn't matter if WP is free if no one is buying a WP phone. Paying a small fee for Android and selling your phones would still be the superior option in that case.

So, in this scenario, Microsoft would get their OS onto millions of additional phones every quarter without lifting a finger. Reportedly, they'd remove the licensing fee for WP, but still get paid for the Android OS on these devices. And as WP adoption increases, this may actually spur manufacturers that have recently retreated from WP devices in the wake of the Nokia acquisition to drop Android, if WP continues to cost them less.

A quietly brilliant strategy, I must say. The big question is what Google will do in response. Will these dual-OS devices have access to their services, or will they allow Microsoft's Trojan horse strategy?

It depends a lot on the market. It doesn't matter if WP is free if no one is buying a WP phone. Paying a small fee for Android and selling your phones would still be the superior option in that case.

^^^^^ 100% - there were already rumors that Samsung and HTC actually paid MORE for their Android licensing than WP licensing costs.

So, in this scenario, Microsoft would get their OS onto millions of additional phones every quarter without lifting a finger. Reportedly, they'd remove the licensing fee for WP, but still get paid for the Android OS on these devices. And as WP adoption increases, this may actually spur manufacturers that have recently retreated from WP devices in the wake of the Nokia acquisition to drop Android, if WP continues to cost them less.

A quietly brilliant strategy, I must say. The big question is what Google will do in response. Will these dual-OS devices have access to their services, or will they allow Microsoft's Trojan horse strategy?

It depends a lot on the market. It doesn't matter if WP is free if no one is buying a WP phone. Paying a small fee for Android and selling your phones would still be the superior option in that case.

Everybody sees what is in it for MS. But there is nothing in it for HTC - it already has a more popular, more customizable OS for free so what does it get by taking WP8 (even for free), unless MS is ready to waive off any Android tax and/or pay HTC money to put their OS on their phones or they will be left with unsold inventory.. MS know all about how that goes..Maybe HTC makes these phones for MS and MS takes the responsibility of moving them? That would work out for HTC (just like the nexus program).. BTW Google gets nothing so it might not agree to this and HTC might be out of the OHA.

[edited for clarity]: ...HTC, one of Microsoft’s closest handset makers, is responsible for 80 percent of Windows Mobile phone sales. The number is astonishingly high when you consider the next fact: Microsoft has 50 handset partners.

It depends a lot on the market. It doesn't matter if WP is free if no one is buying a WP phone. Paying a small fee for Android and selling your phones would still be the superior option in that case.

And that's definitely how the market is today. But in the future, after Android users are able to test WP on their own devices (especially significant on low-end ones), and with MS continuing to improve their OS and product integration, I'd expect demand to continue increasing.

But focusing on the present: it sounds like the thrust of this deal is to get more devices running WP that otherwise would not be shipped due to manufacturer disinterest. And if that's the case, any WP device shipped from a manufacturer other than MS has to be considered a win for the company. And any Android user converted to WP must be considered a victory as well. I don't see a downside here.

As a phone OS I prefer Windows 8 over Android, because the UI is better IMHO, and the programs I need in a /phone/ is better.

But lets be realistic, if there´s a dualboot option, how many people would choose it over Android?

Wouldn´t it be wiser to leverage the lack of a license to offer the Windows 8 phones cheaper, until Windows 8 phone is at a point where it in the mindset of the general population has a competetive set of apps.

edit:

Upon some contemplation. Offering identical phones at difference price points depending on OS, would give consumers the impression that the more expensive one, ie. Android, was superiour.

Ah, how times change. I remember when Be inc. and various Linux-vendors were courting PC OEMs to ship computers that dual-booted Windows and alternative OS, or simply ship computers without Windows. And Microsoft came down on those plans like ton of bricks.

Fast forward to today, and we have Microsoft begging phone-OEMs to ship some phones with their OS, or offer them as dual-boot phones...

[edited for clarity]: ...HTC, one of Microsoft’s closest handset makers, is responsible for 80 percent of Windows Mobile phone sales. The number is astonishingly high when you consider the next fact: Microsoft has 50 handset partners.

Its first step was to develop a close relationship with Nokia; the second step seems to have been to buy Nokia's handset division outright.

Just FYI, buying Nokia was not the "second step" in some sort of plan. It was a desperate move -- they didn't want to buy Nokia but if they had not Nokia would have either folded or else started selling Android phones, and either would have been disastrous for Microsoft's share in the mobile market.

Microsoft's WP8, in spite of generally positive reviews, has failed in the market. I'm not generally a fan of Microsoft, but I think it would be good to have a third player so I hope they can keep at it and find a foothold.

How many decades does it take before a phone OS is no longer "fledgling"? lol

Windows Phone debuted in 2011.

Low cost, Low end hardware is what Windows Phone makers need to hit to be successful. Look at the markets where WP has been successful, many of them are based around a tailored low end device specifically built for that region. Windows phones can be built cheap and still offer a high end experience, that is what is great about them.

Yeah, good luck with that Microsoft. Good luck wooing a company that you have been torturing by extorting them into paying bogus licensing fees for Android. They have already learned all about your ethics and sense of fair play. Put that together with the fact that the only other WP vendor is OWNED by Microsoft. Would these facts make you all warm and fuzzy and want to become forevermore dependent on Microsoft?

Microsoft's WP8, in spite of generally positive reviews, has failed in the market. I'm not generally a fan of Microsoft, but I think it would be good to have a third player so I hope they can keep at it and find a foothold.

In some markets IOS is actually third behind WP8. Microsoft's success in those markets is due to cheap phones that don't look or feel cheap. (And Nokia brand recognition) So getting WP8 on a HTC One might be great for US market share, but Microsoft will benefit more if it can get WP8 on cheaper phones that still have an air of quality.

From HTC's side I can see them supporting more WP8 devices if Microsoft drops their fees and bankrolls advertising. No need to pay HTC if the are going to spend millions advertising HTC products.

How many decades does it take before a phone OS is no longer "fledgling"? lol

every time they just abandon every single customer and change the OS it is fledgling again. happens every couple years with them... they wonder why there is no brand loyalty, there is no customer loyalty.

you really think i am going to buy a win 8 phone when my Titan (HTC) never got upgraded? keep on fledgling, or maybe flailing.

Windows on a phone, however, has been around a lot longer than that. The first "Windows Phone" was released in 2003 Source: Wikipedia.

So 10 years of Microsoft on a phone, in one way or another. At one point, they were the dominant smartphone (for the definition of smartphone at that time) player in the market until 2007, when its market share began to decline. At that time, 42% of the smartphones were running Windows Mobile.

[edited for clarity]: ...HTC, one of Microsoft’s closest handset makers, is responsible for 80 percent of Windows Mobile phone sales. The number is astonishingly high when you consider the next fact: Microsoft has 50 handset partners.

Microsoft has made a lot of missteps with WP7 and WP8 but I think they are decent products overall. I'm not actually sure what they could do to really muscle substantially into the smartphone market. Ballmer gets a lot of criticism but it seems like smartphones may be somewhat similar to the 90s PC market in that once a strong player in the OS space has been established it's all but impossible to muscle them out.

Where smartphones are different is Apple has been beaten by Android in terms of total adoption but continues to mostly grow sales and maintain profitability on smartphones. Unlike how it was pushed into irrelevancy in the desktop computer market it shows no signs of going anywhere in phones, which means we may end up with a duopoly of sorts.

So 10 years of Microsoft on a phone, in one way or another. At one point, they were the dominant smartphone (for the definition of smartphone at that time) player in the market until 2007, when its market share began to decline.

So 10 years of Microsoft on a phone, in one way or another. At one point, they were the dominant smartphone (for the definition of smartphone at that time) player in the market until 2007, when its market share began to decline.

WHAT?

Windows Mobile was only dominant in the US. But I never recalled their marketshare going over 25%, and that happened when palm turned really stupid and made the Treo700w.